Virtually all public companies are feeling some pain over the nature and magnitude of accounting change occurring in their organizations the past few years, according to a recent PwC poll.

More than half of all public company respondents said they are finding the adoption of new accounting standards over the past few years to be somewhat difficult, and 40 percent rated it very difficult. Only 5 percent said their experience has not been difficult.

The late April/early May poll of more than 600 executives, 70 percent of whom work in public company settings, found one-third were still working on finalizing their implementations of the new revenue recognition standard. The massive accounting change took effect for calendar-year companies Jan. 1, 2018, so work into late April or early May suggested some respondents may have represented non-calendar-year companies and some were doing post-effective date work, PwC says. Nearly 20 percent of the public company representatives in the surveys said they expected to spend $1 million or more on that accounting change alone.

Then comes lease accounting, where a new standard to bring leased assets and liabilities on to corporate balance sheets takes effect Jan. 1, 2019, for calendar-year companies. Nearly 40 percent of public companies said they are finding the effort so far greater than they expected. The majority of public companies in the poll, 57 percent, said they were making progress in implementing the standard. Another 34 percent were still assessing the effect the standard would have on their particular organizations, and 8 percent had not begun any work to prepare for the new accounting.

Nearly one-third of public companies said they had assigned three to four people to the implementation effort, and nearly as many had assigned seven people or more; 17 percent had dedicated five to six people to the task, and 23 percent only assigned one to two people.

Across both public and private companies, data abstraction is proving the most difficult aspect of adopting the standard. Once companies identify all their lease contracts, they must pull dozens of data points from each contract to perform the new accounting; for more complex contracts, the number of data points can be measured in hundreds.

Close behind data abstraction, companies are identifying the biggest changes in having the right human capital or resources to assign to the job, having the right processes and controls to transition to and perform the new accounting, and identifying the population of lease obligations that are subject to the new accounting.

Project management and systems issues are proving difficult as well, the poll finds. More than half of the public companies in the poll expect to make significant system changes to accommodate the new accounting. More than one-third say they do not expect significant system changes, and 12 percent were uncertain. 

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